Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

Use Source B in the insert.
(a)[4]

Explain why M Limited made a prior period adjustment in information 2. Support your answer by naming the relevant International Accounting Standard and stating the accounting treatment.

(b)[4]

Calculate the profit for the year to 31 December 2022.

(c)[17]

Prepare a statement of cash flows for the year to 31 December 2022 in accordance with IAS 7.

Worked solution & mark scheme

This 25-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Depreciation $20 000 ($400 000 \times 5%) on the existing building should have been charged for 2021” …

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